Most Japanese industry executives contend that the proposed environment tax should not be introduced on the grounds that it would slow the growth of gross domestic product. In my opinion, this argument is totally mistaken.
Introduction of the tax would merely cause the transfer of income from consumers and companies to government coffers. As long as the government makes no mistakes in spending the money, the macro-economic effects of the tax should be neutral.
If the government cuts income and corporate taxes in amounts equivalent to revenues from the environment tax, consumer spending will increase — thanks to the availability of more disposable income — as will corporate investment on equipment and research and development.